What's Happening?
Ruya, a digital-first Islamic bank based in the UAE, has entered into a partnership with 4most to design and implement an IFRS 9 Expected Credit Loss (ECL) framework. This collaboration aims to support Ruya's initial portfolio launch and strengthen its
credit risk governance capabilities. Ruya, headquartered in Ajman and launched in 2024, provides Sharia-compliant banking and financial services to various consumer and business segments, including entrepreneurs and corporates. The IFRS 9 ECL framework is designed to build robust and transparent credit risk processes, covering the development of models across retail, SME, and corporate portfolios. The framework is intended to evolve alongside Ruya's expanding product offerings, allowing for the onboarding of additional portfolios over time. 4most will provide ongoing support for the execution of Ruya's ECL processes over a 12-month period, including quarterly production of ECL numbers and onsite support.
Why It's Important?
The partnership between Ruya and 4most is significant as it underscores the importance of robust credit risk management in the banking sector, particularly for new and expanding financial institutions. By implementing a comprehensive IFRS 9 ECL framework, Ruya is positioning itself to manage credit risk effectively, which is crucial for maintaining financial stability and regulatory compliance. This move also highlights the growing trend of digital-first banks adopting advanced risk management practices to enhance their operational efficiency and governance. The collaboration with 4most provides Ruya with the technical expertise and support needed to establish a solid foundation for its credit risk processes, which is essential for its long-term growth and success in the competitive banking industry.
What's Next?
As Ruya continues to expand its product offerings, the IFRS 9 ECL framework will be adapted to accommodate new portfolios. The ongoing support from 4most will ensure that Ruya's credit risk processes remain robust and compliant with regulatory standards. This partnership may also set a precedent for other digital-first banks in the region to adopt similar frameworks, potentially leading to a broader shift towards more sophisticated risk management practices in the banking sector. Additionally, Ruya's commitment to building strong credit risk governance could enhance its reputation and attract more customers seeking reliable and transparent financial services.
